Selection of stocks and bonds that best fit into our preferred asset allocation
In our qualitative stock selection, we are looking for companies with a solid and sustainable business model that we fully understand.
On the equity side, we focus on market dominance and innovation (“Schumpeter stocks”). On the bond side, we are looking for solid debtors who have an attractive risk/return ratio.
With the term "Schumpeter stocks" we describe companies that operate in monopoly-like structures (large market power, high margins and high entry barriers) and have sustainable business models, which lead to relatively stable profits in all market phases and are largely paid out as dividends. But also companies that challenge traditional markets and have a high level of innovation and very strong growth. The main characteristic here is less the dividends, but rather growth.
In our quantitative stock selection, we select stocks primarily according to risk factors: value (low-priced stocks), momentum ("past winner"), low-beta (defensive stocks) and quality (companies with stable earnings and cash flows). On the bond side, we focus on credit risk premiums and market inefficiencies.
In contrast to classic selection criteria, risk factors offer empirically more robust diversification and a more stable excess return. The implementation is carried out using a proprietary scoring model in which each risk factor consists of a large number of inputs.